Monday, August 18, 2014

The North Dakota Economic Boom--From the Inside

I have read about the economic boom in North Dakota. The state has the highest economic growth rate and the lowest unemployment rate in the nation, primarily due to energy production using hydraulic fracking. But I didn’t really appreciate the statistics until I recently had an opportunity to see what that boom looks like “on the ground.”

Last week, my wife and I went to western North Dakota, the heart of the fracking industry, to backpack in Theodore Roosevelt National Park. When we weren’t backpacking, we got a chance to see the North Dakota economy first-hand. What we saw amazed us:

  • Motels in remote places like Dickinson and Watford City charging more than $200 a night. Not four-star hotels. Chains like AmericInn and La Quinta. And these are not prime tourist locations. Look for Watford City on a map; it’s in the middle of nowhere. (No disrespect intended to any North Dakota readers, but you have to admit that, but for the fracking boom, Watford City is not prime real estate.)
  • Temporary housing everywhere. One reason the hotel rates were high is that many of them are housing workers on a permanent basis. There is a serious housing shortage. We saw literally dozens of mobile home encampments, and apartment rents have skyrocketed.
  • Jobs begging for workers. Almost every business we visited had some sort of “jobs available” sign. We saw a sign at one hotel offering bonuses of $500 to $1000 for housekeepers.
  • Immigration. Not surprisingly, the low unemployment rate, the relatively high pay, and the available jobs have drawn people from outside the state. Many of the people we talked to were not natives and their time in the state was typically measured in months, and sometimes just weeks.
  • Construction everywhere—motels, apartment complexes, grocery stores, strip malls, and roads.
  • Thriving businesses. We visited a large grocery store in Watford City, a small town of a few thousand people. Although we were there at early afternoon on a Monday, we were surprised to see every check stand open, with three or four carts lined up for each checker. We asked a local why the store was so busy on a weekday afternoon and he told us it was always that busy.
  • Traffic, traffic, traffic. Because of the boom, the infrastructure has not always kept up with the economy. The roads in western North Dakota were packed with oil trucks, pickups, and almost every kind of business vehicle imaginable. At one rural highway intersection in the middle of the fracking area, we waited almost 20 minutes to get through the light.

It’s one thing to read about the boom; it’s another thing entirely to see it.

I don’t know what the effect of all this has been on business lawyers in North Dakota, but my guess is their practices are booming. Someone has to draft all the leases and employment contracts, and at least some of that work is being done within the state. And I suspect there’s a big boom for criminal lawyers as well. As one local told us, there’s a lot of testosterone (most of the oil workers are male) and a lot of liquor, and that’s not a good combination.


http://lawprofessors.typepad.com/business_law/2014/08/the-north-dakota-economic-boom-from-the-inside.html

C. Steven Bradford, Current Affairs, Entrepreneurship | Permalink

Comments

Great post, and thanks for updating people about this. It really is a remarkable boom. I will be in North Dakota next month doing more information gathering about the continuing effects, challenges, and opportunities raised by the oil boom. I moved to North Dakota in 2007, and the changes in the western part of the state (and beyond) between then and when we left in 2012 are astounding.

For anyone interested, below are links to a couple of my pieces discussing the economic, environmental, and social impacts of the boom.

North Dakota Expertise: A Chance to Lead in Economically and Environmentally Sustainable Hydraulic Fracturing, 87 North Dakota Law Review 487 (2011), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2176451

The Oil and Gas Evolution: Learning from the Hydraulic Fracturing Experiences in North Dakota and West Virginia, 19 Texas Wesleyan Law Review 23 (2012), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2175798

Posted by: Joshua Fershee | Aug 18, 2014 10:47:26 AM

Thanks, Josh. I thought you might chime in on this one. For those who aren't aware of it, in addition to being an energy law expert, Josh taught at North Dakota until 2012.

Posted by: Steve Bradford | Aug 18, 2014 10:51:29 AM

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